Former employees of Molina Healthcare Inc. sued the company and its 401(k) plan fiduciaries alleging ERISA violations because the plan offered investments with higher fees than comparable options available in the marketplace.
The seven ex-employees charged that the defendants breached their ERISA duties by offering "higher-cost shares of mutual funds and collective investment trusts that charged unreasonable fees relative to other investment options that were available to the plan at all relevant times," said the complaint filed March 18 in U.S. District Court in Los Angeles.
The plaintiffs also alleged ERISA violations because the plan retained a flexPATH target-date fund series that they said performed worse than similar investments, according to the complaint in the case of Mills et al. vs. Molina Healthcare Inc. et al. The plaintiffs are seeking class-action status; flexPATH is not a defendant. The plaintiffs argued that the Molina fiduciaries should not have added what they called an "untested" target-date series to the plan lineup in May 2016.
The complaint alleged that the target-date series was launched in December 2015 and January 2016. "When the flexPATH target-date funds were launched, their target-date fund management style had never been used in any target-date fund solution in the marketplace," the lawsuit said.
A representative from Molina Healthcare did not respond to a request for comment.
The Molina Salary Savings Plan, Long Beach, Calif., had assets of $740.9 million as of Dec. 31, 2020, according to its latest Form 5500 filing.
